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FISCAL TREATMENT OF “CREDINS PENSION” FUND

The pension fund is a group of assets, created on a contract basis, without legal personality, therefore it is not subject to income tax or value added tax. The taxation of the Fund is based on Law no. 8438, dated 28.12.1998 “On income tax” as amended, and the bylaws issued in its implementation.

FISCAL TREATMENT OF CONTRIBUTIONS MADE BY MEMBERS

In accordance with law no. 10 197, dated 10.12.2009, on Voluntary Pension Funds, Article 88:

  • The contribution made by each member of the Fund is deducted from his personal income for tax purposes.
  • The return on investment, including capital gains from investments made with the Fund’s assets, is not subject to tax, either for the Fund itself or for the management company.
  • Contributions made by the employer and any other contributor in the name and on behalf of the member of the Fund for fiscal effects, are not valued as personal income of the member.
  • In case the member in the Fund is under 50 years old, the maximum limit for tax benefits for annual contributions is the smallest value that results from the comparison of the amount of ALL 200,000 and 15% of the gross annual income of the member.
  • In case the member is over 50 years old, the maximum limit for tax benefits for annual contributions is the smallest value, which results from the comparison of the amount of 250,000 ALL and 25% of the gross annual income of the member.
  • The purchase of the Fund’s units is a financial service and is therefore excluded from VAT.
  • Services provided by the Depository to the Management Company and its members are assessed as a financial service and therefore are excluded from VAT.
  • The tax that accompanies early withdrawal is the applicable rate at the time of withdrawal.

FISCAL TREATMENT OF CONTRIBUTIONS MADE BY THE EMPLOYER

Contributions made by the employer in the interest of his employees in a professional pension plan are estimated as operating expenses, up to the annual amount for each employee, equal to ALL 250,000, and this amount is estimated as a deductible expense, for employer’s profit tax purposes.

FISCAL TREATMENT OF BENEFITS RECEIVED BY MEMBER

Any payment received by a member of the Fund at the moment he meets the legal requirements for benefit is taxed with personal income tax.

EARLY WITHDRAWAL

If the Fund member seeks to withdraw the assets accumulated in his individual account without meeting the legal criteria to benefit, this is considered as an early withdrawal. Early withdrawal is accompanied by penalties, which are calculated in relation to the time fulfilled by the member from the moment of his first contribution on the first voluntary pension fund, until the moment of early withdrawal

EARLY WITHDRAWAL PENALTY

In case of early withdrawal, the Management Company will apply penalties which will be calculated on the net value of the assets required to be withdrawn prematurely after the tax has been deducted according to the legislation in force at the time of withdrawal. The concrete percentage of the penalty for each case according to the definitions above, will be calculated proportionally depending on the period of contributions:

  • 15% up to the first 5 years from the date of the first contribution;
    • 10% if 5 years have passed since the first contribution, but not more than 10 years;
    • 5% if 10 years have passed since the first contribution;
    • 2% for any early withdrawal made after 20 years from the date of first contribution
    • 0% if the client is of legal retirement age or up to 5 years before retirement age;
    • 0% if the client is classified as permanently incapable of work.

At the legal age of receiving the voluntary pension, the client has the opportunity to withdraw his pension fund in the total amount immediately or periodically at his request.

For the purpose of calculating the penalty of early withdrawal as the date of the first contribution will be considered the first date of payment of the contribution to the first pension fund

FISCAL TREATMENT OF “CREDINS PREMIUM” FUND

The taxation of the Fund is based on Law no. 8438, dated 28.12.1998 “On income tax” as amended, as well as bylaws in its implementation. Income derived from securities is considered a taxable source of income for the purpose of applying personal income tax. The investor is taxed only on the added value of the fund, at the moment of withdrawal.